What's Oculus VR, and why did Facebook pay $2B for it?

By Brandon Griggs, CNN

Updated 7:01 PM ET, Wed March 26, 2014

Facebook's top 10 purchases7 photos

Oculus VR – Oculus makes a virtual reality headset which covers users' eyes and immerses them in a virtual environment that responds to their head movements. Facebook said its focus is on investing in the product for the future.

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Facebook's top 10 purchases7 photos

WhatsApp – In an attempt to dominate messaging online, Facebook acquired WhatsApp for the record sum of $19 billion. The five-year old app had 450 million users at the time of the acquisition in February, adding a million users every day.

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Facebook's top 10 purchases7 photos

Instagram – Facebook bought the photo-sharing network Instagram for $1 billion in 2012 with a combination of cash and stock. "Providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together," Mark Zuckerberg said about the purchase.

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Facebook's top 10 purchases7 photos

Face.com – Facebook recognizes people's faces in photos and tags them with their names. The social network acquired a face-recognition technology company which made this possible, Face.com, for between $55 million and $100 million in 2012.

Parakey – When Facebook bought Parakey in 2007 for an undisclosed sum, it was its first big acquisition. Facebook was actually buying the brains behind the startup -- Blake Ross and Joe Hewitt, the co-founders of Mozilla Firefox, an open-source web browser. Ross and Hewitt joined Facebook's team to work on the development of the network.

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Facebook's top 10 purchases7 photos

ConnectU – In a deal that inspired the 2010 Oscar-nominated drama "The Social Network," Facebook agreed to acquire ConnectU from the Winklevoss brothers after a court settlement under which Facebook bought the rival networking site for cash and a share in Facebook stock.

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Story highlights

The company's virtual-reality headset, the Oculus Rift, has gotten raves from reviewers

In the hopes of raising $250,000 to make a few hundred headsets for diehard enthusiasts, Luckey launched a Kickstarter project in 2012. He hit that goal in four hours and within a month had raised nearly $2.5 million.

Early prototypes of the Oculus Rift soon drew raves at tech conferences. Gaming legend John Carmack, the lead programmer of pioneering games like "Doom" and "Quake," came aboard last year as Oculus' chief technology officer. And both CNN and Time honored the Rift in 2013 as one of the top inventions of the year.

Developer versions of the headsets began rolling out to Kickstarter backers and others last spring. A consumer version is expected sometime later this year.

How does the Oculus Rift work?

The headset, which looks like something a skier or scuba diver might wear, fits snugly over the wearer's face and is paired with headphones. A high-definition 3-D display immerses you in an interactive world -- a medieval village, a tropical jungle, a jet's cockpit -- which you navigate with the help of a game controller.

The goggles come packed with an extra-wide field of view, accelerometer, gyroscope and compass to track the position of your head and sync the visuals to the direction where you are looking. This technology has allowed Oculus to improve on the sometimes jerky visuals of other virtual-reality systems.

Maisie Williams wears an Oculus Rift headset during a "Game of Thrones" exhibit this month at South by Southwest.

This is the big question. Given the potential demand for the Oculus Rift when it hits the market, Facebook may view Oculus purely as a new stream of revenue. Some observers suggest the purchase is an attempt to inject some futuristic cool into an aging social-media company that's falling out of favor with young users.

By buying Oculus, Facebook also is betting that the next tech wave could be ruled by wearable devices -- a similar path being trod by Google, with its Glass eyewear, and Samsung, with its Galaxy Gear smartwatch.

"After games, we're going to make Oculus a platform for many other experiences," said Zuckerberg in a post announcing the purchase. "Imagine enjoying a courtside seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face -- just by putting on goggles in your home.

"This is really a new communication platform. By feeling truly present, you can share unbounded spaces and experiences with the people in your life. Imagine sharing not just moments with your friends online, but entire experiences and adventures."

The Oculus Rift, however, remains an immersive but isolating experience -- it's not clear how Facebook would integrate social functions into a Rift game, or whether users would even want that.

So, yes, the Oculus Rift might be a real-world step toward the "Star Trek" Holodeck, a chamber which can simulate any environment. Instead of messaging your old college pals through Facebook, why not meet them for a virtual hike through the Grand Canyon?

"You get the goosebumps," Iribe continued. "You see how big this could be, and how social it is, and the impact it could have on other industries."

Still, however, some observers remain skeptical.

"The real question is: Does Mark Zuckerberg actually believe that Facebook's aging user base is going to be enthusiastic about the notion of a virtual social experience?" wrote Eric Mack for Forbes.

"While I'm sure that Facebook would love to integrate virtual reality gaming and chats with doctors on the other side of the world into its platform," Mack added, "could part of the calculus also be to hedge against the day that the era of the social network as we know it becomes totally played out?"